Microsoft, States Present Arguments in Prehearing Filing

Both sides in the Microsoft antitrust case presented their arguments to Judge Colleen Kollar-Kotelly last week in anticipation of what will probably be an ugly court battle that's set to begin March 11. The District of Columbia and nine US states that still oppose the Microsoft and Department of Justice (DOJ) proposed settlement say that their goal is to prevent a "Microsoft-controlled world." Microsoft, meanwhile, says that the sweeping restrictions the states seek will harm "software developers, hardware vendors, and consumers."

In a 140-page joint court filing, the states and the District of Columbia said they believe that the Microsoft and DOJ proposed settlement is weak and littered with loopholes that will let Microsoft continue its illegal activities and gain control of new markets such as set-top boxes, handheld devices, and computer servers. The states also want to ensure that Microsoft won't continue to illegally leverage its desktop OS monopoly by freely bundling applications in Windows; to prevent this action, the states say, the court should force Microsoft to offer a less expensive, stripped-down Windows version. In addition, Microsoft must open up the source code to its Internet Explorer (IE) Web browser, which rose to market dominance almost solely through illegal product bundling with Windows, according to the states. Finally, the court should require Microsoft to produce Microsoft Office products for competing OSs, such as Linux and the Mac OS.

Microsoft says that the states' remedy proposals amount to nothing more than a "wish list" for Microsoft's competitors and that companies such as AOL Time Warner, Oracle, and Sun Microsystems--not consumers--will most benefit from such draconian measures. Separately, Microsoft accused Oracle of helping the states draft their proposal.

Although the remedy hearing begins March 11, Microsoft will first appear before the judge a week earlier. Because public reaction to the settlement was largely unfavorable, she'll determine whether stronger remedies are required in the proposed DOJ settlement. The judge can approve the settlement only if it's in the public interest, and Microsoft and the DOJ fear that public reaction could sway the judge's decision. If she throws the settlement out, the two sides will need to begin negotiating a new settlement that's less favorable to Microsoft.